Kmart Announces Cuts At Its Headquarters

Kmart Holding Corp. said Tuesday that it was cutting about 200 jobs at its headquarters as part of ongoing streamlining efforts.

The company, based in Troy, Mich., also lowered the maximum number of stores it plans to sell to Home Depot Inc. from 24 to 19.

The planned real estate sale had been greeted enthusiastically by Wall Street, and Tuesday's news sent Kmart's stock downward. Shares fell $3.21, or nearly 5 percent, to close at $64.40 in trading on the Nasdaq Stock Market.

Under the revised agreement with Atlanta's Home Depot, Kmart will sell no fewer than 13 stores for $173 million in cash and up to 19 stores for $288.5 million. Previously, Kmart said it would sell up to 24 stores for a maximum of $365 million.

Sales of four stores already have been completed for $59 million. Payment for an additional nine stores is to be received in escrow within the next five days, with the money to be released to Kmart upon the transfer of property, the company said. Store-closing sales will be held at the sold locations.

Kmart spokesman Stephen Pagnani declined to identify the stores that have been sold or provide any further comment. Home Depot spokesman Jerry Shields also would not comment on the locations, saying Kmart had to inform the stores' employees first.

In a separate statement, Kmart said it was reducing staff at its headquarters by about 10 percent. Kmart's Web site says 2,400 people work at its headquarters. "While today's decision was extremely difficult, these changes better align corporate headquarters support with the improved field organization," Kmart said.

Kmart emerged from bankruptcy in May 2003 with about 1,500 stores -- 600 fewer than before -- and has continued to pare down its workforce this year. The company has 144,000 employees, according to its Web site -- down from 158,000 at the end of January.

Kmart has improved its financial picture since emerging from bankruptcy, but it has struggled to maintain sales in the face of competition from Wal-Mart Stores Inc. and Target Corp.

The company is taking advantage of demand for its valuable real estate. In June, the company announced plans to sell up to 54 of its stores to Sears, Roebuck and Co. for up to $621 million.

Gary J. Ruffing, a retail consultant at BBK Ltd. and a former Kmart executive, said the job cuts could be a sign the company is preparing to sell another piece of real estate -- its headquarters -- and move elsewhere. Kmart's headquarters "is probably one of their highest-valued possessions as far as real estate is concerned," Ruffing said.

The company said it will cut about 200 jobs in Troy, Mich., and lowered the number of stores it plans to sell.